The members of the State Senate unanimously voted in favor of two bills on March 7 that could, if passed by the Assembly and signed by Gov. Andrew Cuomo, assist small business owners. One bill would allow small businesses to create tax-deferred savings accounts for specific business needs. The other would establish a Small Business Crime Prevention Services Program. Both bills are currently in committee in the Assembly, and are expected to pass.
“Small businesses are the lifeblood of a vibrant community,” said Sen. James Gaughran, a Democrat from Huntington. “These initiatives will help make it easier for them to thrive and provide an important public safety program.”
Tax-deferred savings accounts
The first bill would allow businesses to contribute to tax-deferred savings accounts from which money could be withdrawn during times of economic hardship, for renovations, or for job retention and creation. The accounts could also be utilized when the governor deems that a natural disaster warrants assistance from the federal government.
Ryan Schlotter, the president of the Oyster Bay-East Norwich Chamber of Commerce and a co-owner of Oyster Bay Brewing Company, welcomed the possibility of tax-deferred savings. “There are unforeseen costs throughout the year for small businesses and for new ones which are inevitable,” he said. “If we have a way to put away money that is not taxed, it would help.”
Gaughran said that the accounts could also help small businesses if there is an economic downturn or even if weather — like an overly rainy summer — causes a dip in sales.
“It’s tough for them to compete,” he said. “This is a way to use our tax code to help small business.”
In a recent press release, State Comptroller Thomas P. DiNapoli indicated, by way of data obtained from the U.S. Census Bureau, that employment among New York’s small businesses has increased slightly faster than the national rate, an indication of growth. But DiNapoli also said that small businesses face a variety of challenges, including a constantly changing marketplace and the competitive demands of a global economy.
Vinny Moscata, who owns an elevator company in Manhattan and is the president of the Bayville Chamber of Commerce, was hesitant to support the bill. His worry, he said, is that untaxed money, which he referred to as “free money” may later create a tax shortfall. “The county is always saying that it has to raise our taxes for the budget,” Moscata said. “Will they take from Peter to pay Paul?”
Steve Warshaw, a local real estate broker and the president of the Gold Coast Business Association, said he is a saver. He supports the tax-deferred savings accounts and is hopeful that they are even being considered. “Maybe the legislators are starting to get the idea that their constituents are tapped out,” Warshaw said. “If you spur a business on, you make a neighborhood better.”
He mentioned the recent success that Patchogue has had in its revitalization. Small businesses, legislators and the town worked together, he said. Warshaw added that he hoped that a similar plan could move the North Shore’s small businesses forward.
The tax-deferred savings bill was brought to the Assembly by Charles Lavine, a Democrat from Glen Cove. He said that lawmakers know it’s a good bill, and that he hoped it would pass.
Some business leaders said they wondered whether there would be a cap on savings, and whether the funds could be carried over to the next year. Lavine said that the current bill doesn’t include a cap, and he believed money could be carried over.
A similar bill was crafted six years ago, he said, when a federal version was being considered simultaneously. But Cuomo would not sign it, Lavine recalled, because he said he was concerned about the cost.
“At this point, there remains a question as to what the actual cost would be to the state,” Lavine acknowledged. “It would need to be raised another way. After we pass the budget, the Ways and Means Committee can determine how much the bill would cost the state.”
The creation of a Small Business Crime Prevention Services Program is vital, Gaughran said, because crime has changed. Criminals are more clever, he said, in using technology. Larger companies devise strategies and purchase new technology to combat crime, but it can be difficult for smaller businesses to keep up.
Warshaw cited a recent rise in phone scams. “I get calls often from local businesses and residents,” he said. “Anything that can be done to stave off fraud and theft for small business owners is always a good thing. I’m sure this would help.”
Lawmakers would like to set up a system, Gaughran said, that would offer new security technology to small businesses and provide information to those that are victims of theft and fraud.
Moscata said he hadn’t heard of any businesses in Bayville falling victim to scams or theft, but added that he supported the bill. Even if it’s only a website, it would be helpful, he said.
The bill itself indicates that the Small Business Crime Prevention Services Program would provide “organizational and financial resources needed to deliver cost-effective crime prevention programs to New York’s small businesses, to the benefit of the wider community.”
Schlotter said he hadn’t heard any complaints about crime from other businesses in town. His company, however, has had its credit card information stolen a few times, he said, and has received an alert about charges that were not made by the company. “It’s a given that technology is moving forward as negatively as it is positively,” he said. “If this gives small business owners an opportunity to ramp up the security . . . this will offer protection. I’m for it.”